In a relief to lakhs of commuters plying between Delhi and Noida, the Supreme Court on Friday upheld that the DND flyway will remain toll-free and castigated the NOIDA authority and the Uttar Pradesh and Delhi governments saying the blatant misuse of power and breach of public trust have profoundly shocked its conscience. The top court dismissed an appeal of Noida Toll Bridge Company Ltd (NTBCL), a private firm running the Delhi-Noida-Direct (DND) flyway, against the 2016 decision of the Allahabad High Court order asking it to stop collecting toll from commuters.
A bench of Justices Surya Kant and Ujjal Bhuyan said, “NTBCL has recovered the project costs and substantial profits, eliminating any justification for the continued imposition or collection of user fees or tolls.”
The bench said NOIDA overstepped its authority by delegating the power to levy fees to NTBCL through the concession agreement and regulations, exceeding the scope of its powers.
It said if a governmental action disproportionately favours a private entity at the expense of public welfare, it is liable to be struck down as invalid.
Holding that no person or entity can be allowed to make an undue and unjust profit from public property, at the cost of the public at large, the bench said the CAG report further states that the annual toll income of NTBCL during 2001-2016 was Rs 892.51 crore.
“NTBCL has been making profits for the last 11 years; has no accumulated losses as of March 31, 2016; has paid dividends of Rupees 243.07 crores till March 31, 2016 to its shareholders; and repaid all its debt with interest. NTBCL had thus, by March 31, 2016, recovered the project costs, the maintenance costs, and a significant profit on its initial investment. There is no rhyme or reason for the collection of user fees/tolls to continue,” it noted.
The NTBCL said the judgement is likely to serve as a guidance to developers for all ongoing and future infrastructure projects under PPP model as they may need to reassess project risks, factoring in the implications of this judgment and plan accordingly.
“We completely respect the decision of the apex court in the DND Flyway case pronounced today while sharing our disappointment on the unexpected verdict,” it said.
In its 54-page verdict, the bench said the situation reflects serious impropriety not only by IL&FS and NTBCL but also by the then officers of NOIDA, the Uttar Pradesh and Delhi governments.
“It is inconceivable that multiple layers of government, advised by some of the most astute financial minds, failed to foresee that this formula (for collection of toll) would impose an undue and unfair burden on the users – the general public. Such an outcome could only arise through extraneous considerations influencing several stakeholders. This blatant misuse of power and breach of public trust has profoundly shocked the conscience of this court,” it said.
The top court added the manner in which some senior bureaucrats manipulated the siphoning of project funds for their personal gains clearly make out a fit case for investigation under the Prevention of Corruption Act, 1988, although the ship might have sailed for such action at this stage.
It said that an exhaustive reading of a report of Comptroller and Auditor General (CAG) asked to audit the accounts and related expenses, income accrued from the project highlighted the extent to which the public has been defrauded.
“The general public has been forced to part with hundreds of crores by IL&FS and NTBCL, under the guise of providing necessary public infrastructure. This could not have been done but for the collusion of the then officers of the two state governments and of NOIDA, who closed their eyes while the contractual obligations were incurred.”
The bench said had the PIL petitioner ‘Federation of Noida Residents’ Welfare Association’ not been vigilant of their rights, the public funds would have continued to be misappropriated for private profiteering.
“Furthermore, the role played by IL&FS in this entire scheme is highly questionable. We say nothing except that the facts speak for themselves. Res ipsa loquiter (the thing speaks for itself)”, it said.
The top court held that the contract awarded to NTBCL through the concession agreement by state authorities and NOIDA was “unfair, unjust and inconsistent with Constitutional norms”.
The bench said the contracts loaded with terms which are so unfair and unreasonable, that they truly baffle this court and are undoubtedly opposed to public policy and must be adjudged void.
It added, “the NTBCL and NOIDA have indulged in trickery and placed the cart before the horse, in attempting to authorise actions post facto, thereby obscuring the full extent of misuse of power.”
It noted that a letter dated August 29, 2007 from the CEO of the NTBCL to NOIDA indicated that the total project cost after 30 years would be approximately Rs 5,353 crores, suggesting that the term of the project should be extended to 100 years.
“The CAG report pertinently states that, if NTBCL continues to operate under the current terms of the concession agreement, with extensions as per its provisions, the unrecovered total project cost could rise to around Rs 7,200 crore by March 31, 2020 and Rs 15,200 crore by March 31, 2029. This unending escalation in the total project cost leaves no room to doubt that the concession agreement was cleverly designed to remain perpetually operational,” it said.
